The party's 40.8 percent in Sunday's European elections, with almost all ballots counted, crushed Beppe Grillo's anti-establishment Five Star Movement at 21.1 percent.
Disgraced former prime minister Silvio Berlusconi, who was banned from voting or running because of his tax fraud conviction, came in a distant third with 16.8 percent.
"Renzi's triumph, Grillo's flop," read a headline on Monday in La Repubblica daily, while analysts said Italy's PD was now "the number one progressive party in Europe" following defeats for fellow leftists in other European countries.
Many hailed the result as "historic" - the highest ever electoral score for an Italian left-wing party.
Investors welcomed the result, with the Milan stock market opening 2.2 percent higher.
It was the first time Italians had gone to the polls since the 39-year-old Renzi replaced his predecessor Enrico Letta through an ouster within the Democratic Party earlier this year to become Italy's youngest-ever prime minister.
"There is no doubt that this result gives Renzi legitimacy," La Repubblica editor Ezio Mauro said.
Ferruccio de Bortoli, editor of the Corriere della Sera newspaper, hailed "a huge personal success" for Renzi.
Opinion polls had indicated the result would be a close run between Renzi and Grillo and the outcome was all the more surprising as governing parties were punished across Europe with the exception of German Chancellor Angela Merkel's CDU.
Renzi had portrayed the vote against the firebrand Grillo, who had garnered a quarter of the vote in last year's general election, as "a match between hope and anger".
Grillo had called for a referendum on euro membership and for the scrapping of EU debt reduction targets and his newly-minted lawmakers -- referred to as "grillini" - will be joining the European Parliament for the first time.
Analysts said the result showed Grillo's M5S party had lost support but had cemented its status as the second biggest party, ahead of Berlusconi's centre-right Forza Italia.
"It's something that reflects a general malaise. It will become a fundamental political player in our country," said Piero Ignazi, a politics professor at Bologna University.
'Appeal to hope and optimism'
The anti-euro Northern League party, which has promised to ally itself with France's surging National Front, came fourth in the vote with a higher than expected 6.2 percent.
It was followed with 4.4 percent by the New Centre-Right, a junior coalition partner in Renzi's government, and with 4.0 percent by the far-left "Other Europe" party.
Federico Geremicca, a columnist for La Stampa, said the elections "make a good impression" for Italy as it prepares to take over the EU's rotating presidency later this year.
"The appeal to hope and optimism... took hold in the folds of a country that has been tested but is clearly still confident about the possibility of a recovery," he said.
Stefano Folli from Il Sole 24 Ore business daily said Renzi had been presented with "a truly historic opportunity".
"For the first time, a leader of the centre-left has the power and the means to reform the country," he said.
Turnout was 58.7 percent, down from 66.4 in the last vote.
Several analysts including Folli compared the score to Berlusconi's start in politics in the early 1990s when he beat the left with promises to modernise Italy.
The contrast could not be more stark to Berlusconi 20 years later as he does community service in a hospice after being ejected from parliament over his criminal conviction.
Berlusconi's Forza Italia won around five million fewer votes than in last year's elections, while Grillo lost three million and the Democratic Party gained a million.
Berlusconi is now "more dead than alive", read a headline in the Il Fatto Quotidiano daily. Folli said the 77-year-old tycoon's "personal star has been extinguished".